Strategic Assessment of Passenger Electric Vehicle Market:

Can EVs revive the auto industry?

Benny Daniel, Consultant

Automotive & Transportation

January 29, 2009

© 2009 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

2

FOCUS POINTS

Frost & Sullivan Support Capabilities

Opportunities

Voice of Customer Study- Customer Feedback on EV

New Business Models

EV Infrastructure Analysis

Market Overview and Forecasts

INDENTIFICATION OF ALTERNATE AND UNIQUE BUSINESS MODELS TO SUPPORT EV INFRASTRUCTURE

Diversified

•Garages and service stations

•Charging Stations

•Parking Stations

•Battery Swapping

•Recycling

EV

*Industr ies: Identified and se lected based on definition existing in equity trade markets

**Spending la rge amounts of money in own R&D, to find many of the project s in

dead-ends, hoping for some to turn out as successful blockbuster generating high returns. The mode l is commonly used in industr ies where deve lopment cost s, r isks and potent ial rewards are high.

Technology

•Smart Card

•Telematics

•Mobile Service Providers

Basic Materials

•Li-ion, Copper and other

battery packaging mtls.

Government

•Carbon Trading

•Tax Incentives

Consumer

•Green Collared

Jobs

Financial

•Banks, Insurance

•Venture Capital

Industrial

•Material Mining

•Buildings, homes, hospitals

•Wire and Cable

•Electronics

Utilities

•Power Generation Co.

•Partnership with Renewable Energy Providers

•Energy Storage

MediumLow High

Low

Medium

High

UtilitiesUtilities

Po

tenti

al to

genera

te reven

ue

TelematicsTelematics

Coach Bui lders

MarketingMarketing

Leasing Businesses

Leasing Businesses

FinancialFinancial

Telecom

Fleet Businesses

Fleet Businesses

TelematicsTelematics

Swap Stations

Service/ Dealership

Recycling

Insurance

Potential for businesses to enter

EV market with relatively low

investment; strategise to partner

with OEMs

New business opportunities for

Utilities and Innovative financial-leasing firms- To be resilient

before it makes profits

Innovative model but due to demographics it requires good

EV penetration and customer

utilization- to have high impact if

successful

Battery Rejuvenation

0

50

100

150

200

250

300

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unit S

hip

ments

(Thousands)

100 160 260630

2565

2004 2005 2006 2007 2008

3

Scenario Analysis – 700K Annual Sales Potential by 2015 in NARegulations, Incentives, Loan Programs and Li-Ion Technology Advancement are Primary Drivers

Optimistic Scenario: Relatively high fuel prices (averaging well-over

$150/barrel), continuation of federal government incentives for EVs and

expansion of state/city incentives, significant growth in charging and

battery swap infrastructure, significant Li-Ion battery cost reduction (at

least 50% reduction in 5 years - 2010-2015), no battery supply constraints,

favorable field experience and no major safety issues.

Frost & Sullivan Scenario: Relatively moderate fuel prices (averaging well

below under $150/barrel), continuation of federal government incentives

for EVs, slow growth in charging and battery swap infrastructure, moderate

reduction in Li-Ion battery cost (no more than 33% reduction in 5 years -

2010-2015), no battery supply constraints, no major safety issues.

Sourc

e: F

rost &

Sulli

van

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2008 2009 2010 2011 2012 2013 2014 2015

Unit S

hip

ment

Optimistic Frost & Sullivan Conservative

Electric Vehicle Market: Scenario Analysis (North America), 2008-2015

Key Drivers

• CAFE regulations - 35 fleet mpg by 2020, could be higher if states are

allowed to set higher emission standards

• Government incentives and subsidies for EVs - $7,500 for Chevy Volt, free

parking for EVs by many cities, exemption from emission certification by

some states, HOV lane driving exemption for EVs with a single occupant

• Industry aggressively pursuing HEV and EV strategy to secure $25B

federal auto retooling loans and $17B+ TARP loans

• High energy security concerns and energy independence goal of the

Obama administration

• Technological innovation and economies of scale have driven significant

reduction in Li-Ion batteries

• Growth in charging infrastructure and new business opportunities

4

Start-Up OEs

BMW

Honda

Toyota

Mitsubishi

Daimler

VW

PSA

Renault Nissan

7%

21 %

8 %2%

11%8%4%7%

31%

0

100000

200000

300000

400000

500000

600000

700000

2007 2008 2009 2010 2011 2012 2013 2014 2015

Unit S

hipments

Optimistic Conservative Frost & Sullivan

Electric Vehicle Market: Scenario Analysis (Europe), 2007-2015

Volumes doubling due to early market

entrantsVolumes by Small OEMs- Identical in

all 3 scenarios

Sourc

e: F

rost &

Sulli

van

Start-up OE's

BMW

Honda

Toyota

Mitsubishi

Daimler

VW

PSA

Renault Nissan

4%

16 %

6 %

10%

34%

9%

9%9%

3%

OPTIMISTIC SCENARIO - 2015 F&S SCENARIO - 2015

Scenario Analysis - Market Entry Strategies of Top OEMs and Change in Congestion Charging Schemes Are the Top Influences

5

EV Technology and Product Roadmap- Charging Times to Drop From 6-8 Hours to <15 Minutes By 2015; But All Fast Recharging to Be Made Off-board

So

urc

e:

Fro

st

& S

ull

iva

n

Lead acid

Nickel Metal Hydride

Permanent Magnet

Ele

ctr

ic

Mo

tors

Ba

tteri

es

Advanced Lead acid

Sodium Nickel Chloride

Phosphate based

Manganese based

Titanate based

Silica based

Lithium Ion

Zinc Air

Asynchronous

Switch Reluctance

In wheel motors

Slow charging - onboard

Infr

as

tru

ctu

re

Fast charging – mostly off board

Battery Swapping

Driving Distance/charge-up to 60 kms

Charge Time – 6 to 8 hrs

Perf

orm

an

ce Up to 200 kms

Battery Capacity – up to 16kWh

Motor Power- Up to 70 kW

300 + kms

< 1 hour < 15 minutes

Up to 50 kWh 75 kWh +

70 kW – 250 kW

2005 2010 2015

6

Electric Vehicle Market: Range and spread of Electric Vehicles (Europe), 2007-2015

*Potential Customer ���� Customers “Very likely” to purchase EV with present specifications .•Likely purchase to actual adoption rate would depend on individual market developments

2004 -2008

���� Potential Customers = ~ 686K

���� Key Markets =

2009

-20

10

50 Miles 100 Miles +150 Miles

Drivers :• EV’s limiting range restrict application to cities

���� Potential Customers = ~876K

���� Key Markets =Drivers:• Competition will see EV manufacturers increase

distance, speed and charging time configuration• Consumers to increasingly use EVs to commute from

home (suburban) to work (urban)

���� Potential Customer = ~ 3.42Mn

���� Key Markets = , Scandinavia, Switzerland

Drivers:• 150 + Miles to be standard with high technology batteries

offering stronger storage capacity• Environmental concerns to yield high adoption rate among

potential customers

Cities + Sub-urban + Rural

+ +

Cities + Sub-urban

+

50 Miles

100 Miles

+150 Miles

2011 -

2015

, Scandinavian regions

Cities

Source: Frost & Sullivan

Number Of Potential Customers* To Increase 5 Fold Post 2015 Across Prime W. European Markets As EV Range Extends to Reach Suburban and Adjacent Cities

7

At least 13 Congestion Charging Cities to Be In Operation In Europe By 2013, All Key Cities Have Good EV Potential

• Strong correlation exists between regional markets adoption of congestion charging (and other green initiatives) and

uptake of charging stations, e.g. London and Norway

• Pioneering efforts from relevant industries could facilitate faster expansion of infrastructure

• Charging Stations = 100 (40+in London)• Key Players = Government, EDF, Elektromotiv• Highlights

1. Govt invested £ 90Mn to make Britain the

“Capital of Electric Vehicles”2. EDF has partnered with Elektromotive to

build 250 stations in London

•Charging Stations = 60•Key Players = VM’s, Utilities•Highlights

1. VW & E-ON

2. Daimler & RWE

100

200

200

20

60

50

•Charging Stations = 200 (100 + in Paris & Suburbs)•Key Players = EDF, Govt, VM’s•Highlights

1. Govt allocated €400M to develop charging network2. EDF partnership with Renault & PSA to build charging stations

•Charging Stations = 20 (400 planned)•Key Players = Daimler, ENEL

•Charging Stations = 50 (400 planed)•Key Players = Govt•Highlights

1. Charging station network is a government initiative

•Charging Stations = 1300 target for 2011•Key Players = Govt, Nissan

•Denmark•Charging Stations= 20K plan •Key Players = Better Place, Dong Energy

•Future Schemes at proposal stage, 2008-2015

•Schemes with future potential, beyond 2013

•Future Schemes at proposal stage, 2008-2015

•Schemes with future potential, beyond 2013

•Existing schemes

PLANNED BY 2010

•Synergies and initiatives from several

industries will see the penetration rate of

charging station increase dramatically

•The above forecast could prove

conservative

200

Others

Switzerland

Austria

France

Norway

UK

Italy

Germany

500

90

250

400

425

150

80 Others30

193

Paris

120Bordeaux

47 Lyon

Strasbourg15

Source: Frost & Sullivan

8

Smart House with EV car generator

Smart Grid Control Centre

Wind Power

Solar Power

Energy Storage

Hospital

Pre

20

08

Time Frame

Utility Power Generation InfrastructureTopics

LowHigh

20

08 -

201

5

Implications on Utilities

Conventional Grid and Infrastructure

Houses

Power Station

Office Building

Factory

Transformation of` Conventional Grid ����Energy Internet

• Centralised power stations

• Centralised power generation resulting in substantial power and transmission losses

• Decentralized • Generating facilities –

wind, solar • Offices, hospitals

selling excess energy back to grid

• EV as generators when not in use

• Increased efficiencies

EV Support Capability

ROI Opportunities

Own Generation

UTILITY• Consumers – Utility Bills• Partnership with renewable

energy generators• Charging Stations• Parking Space• Govt - Carbon Trading• Venture Capital• Garage and Stores SupportEXTERNAL• Battery Manufacturers• Telecom Providers• Smart Card • Banks, insurance etc.• Green Collared Jobs• Recycling• Battery Servicing - Swapping

Shift From “Dumb Grid” to “Smart Grid” Will Support the Development of EV Infrastructure

40 % developmen

t

80 %

development

• Limited to grid and utility industry

9

Innovative Business Opportunities Arise from Partnership Formed Between Diverse Industries in Order to Expand Infrastructure in Time for the EV Boom

Identification Of Alternate And Unique Business Models To Support EV Infrastructure

Diversified

• Garages and service stations

• Charging Stations

• Parking Stations

• Battery Swapping

• Recycling

EV

*Industries: Identified and selected based on definition existing in equity trade markets

**Spending large amounts of money in own R&D, to find many of the projects in dead-ends, hoping for some to turn out as successful blockbuster

generating high returns. The model is commonly used in industries where development costs, risks and potential rewards are high.

Technology

• Smart Card

• Telematics

• Mobile Service Providers

Basic Materials

• Li-ion, Copper and other

battery packaging mtls.

Government

• Carbon Trading

• Tax Incentives

Consumer

• Green Collared

Jobs

Financial

• Banks, Insurance

• Venture Capital

Industrial

• Material Mining

• Buildings, homes, hospitals

• Wire and Cable

• Electronics

Utilities

• Power Generation Co.

• Partnership with Renewable Energy Providers

• Energy Storage

BLOCK BUSTER BUSINESS MODEL**New Business Models that will address additional Electric Vehicle (EV) energy requirements will be formed at the

intersection of several diverse and cross functional industries

So

urc

e:

Fro

st

& S

ull

iva

n

10

Battery Leasing Best Returns: Future Leasing Models To Sell 75% Of EVs; The Rest 25% Sold Traditionally

~ $1,200- $2,000$700- $1,000Up to $400Up to $200MONTHLY

LEASE

Free car50% car priceNANASUBSIDY

7 years4 yearsNANACONTRACT

Flat: 30,000km/yearFlat: 25,000km/yearFlat: Max 2000km/monthMonthly BillENERGY

Maintenance Package+

100% Discount

Maintenance

Package+ Discount

Energy Package+

Insurance+ Maintenance

Battery lease +

Electricity

COVER

Full SubsidyPart SubsidyMaintenance PackageEnergy PackageTYPE

Business Model 4Business Model 3Business Model 2Business Model 1

Fu

ture

• Leasing EV batteries will be the likely option to continue beyond 2020. The leasing model might possibly be the main driver of how vehicles will be sold in the future. The immense engineering behind the batteries will only increase the cost and the performance. A strong option to amortize this is through the leasing models.

• Reduction of the product cost is to promote market penetration. In the same direction the future belongs to several ways of separating the energy from the battery.

11

OWNERSHIP & MAIN USAGE

• Driving the vehicle to work is his main priority

• ~40% of the market

• Av miles per trip – 16 (London), parking duration 7 hours

• 60% of these commuters do inner city commute

• Shopping during weekends.

• Differentiate between weekday and weekend usage –

• average only twice a month - 100 miles or more

FEEDBACK ON LEASING BATTERIES

• Prefer to lease battery than source it directly from manufacturer

• Efforts to dispose and effect on environment key reasons

DEMOGRAPHICS

• Male/female falling under the age group of 26-45 yrs

• Has a university degree

• Earning between $30K - $655K

• Resides in London / Greater London

• Flat /semi-detached house residence

SUGGESTIONS ON EV IMPROVEMENT

• Reliability and after-sales service

• Latest battery to aid in greater distance travelled

• Improved and increased access to charging stations

• Improved interior designs for greater experience

• Navigation tools to improve access to POII*

NEEDS

• Reliability, price and fuel economy were the most important issues considered while purchasing EV

• Improved charging capability, provision of fast charger kits and maintenance free motors were features that consumers would consider to boost chances of EV purchase

Male/Female (26-45 yrs)

MOTIVATING FACTORS

• Contribution to environment

• Reduced fuel cost

• Savings on tax and other Govt subsidies

• Free from congestion charging

• Compact and ease in parking

Electric Vehicle Market : Ideal Characteristics of an EV consumer (United Kingdom), 2008

Source: Frost & Sullivan

While Customer Awareness of EV Limitations are High, their Suggestions and Opinion on Incremental Improvements in EV are of High Interest to OEMs

12

Electric Vehicle Market to Create Opportunities and Attractiveness for Industries such as Telematics, Mobile Phones, Fleet Businesses

MediumLow High

Low

Medium

HighUtilities

Effort required to develop EV business

Po

ten

tial to

gen

era

te r

ev

en

ue

Telematics

Coach Builders

Marketing

Leasing Businesses

Financial

Telecom

Fleet Businesses

Telematics

Swap Stations

Service/ Dealership

Recycling

Electric Vehicle Market- Opportunity assessment for various businesses, 2012-2015

Insurance

: Size of the bubble represents the impact on EV market

Potential for businesses to enter EV market with relatively low investment; strategise to partner with OEMs

New business opportunities for Utilities and Innovative financial-leasing firms- To be resilient before it makes profits

Innovative model but due to demographics it requires good EV penetration and customer utilization- to have high impact if successful

Battery Rejuvenation

Source: Frost & Sullivan

13

Our EV Global Research Program

Strategic Assessment of European Passenger Electric Vehicles Market - May 2008

Strategic Analysis of European Market for Electric Corner Modules - Oct 08

Strategic Analysis of Global Market for Fuel Cell Electric Vehicles - Aug 2008

World Hybrid/Electric Vehicle Battery Markets -Jun 2008

Strategic Analysis of In Car Green Technologies - Jun 2008

Advances in Hybrid Electric Vehicles (Technical Insights)

Global Market Analysis of Plug in Hybrid Electric Vehicles Dec 2007

European Consumers’ Attitudes & Perceptions Towards Sustainability, Environment

and Alternate Power-trains - Includes section on Electric Vehicles1. Strategic Review of New EV Business Models in the Automotive Industry – Q1, 2009

2. Analysis of Electric Vehicles Infrastructure for Automotive Applications in Europe and Revenue Generation

Opportunities for Utilities – Q1, 2009

3. Strategic Analysis of the Fleet Market Opportunity for Electric Vehicles in Europe – Q2, 2009

4. Asia Pacific Market Analysis for Electric Vehicles for Fleets and Private Consumer – Q1, 2009

5. North American Market for Electric Vehicles for Fleets and Private Consumer – Q2, 2009

6. Analysis of Hybrid Vehicle Systems and Technologies in North America – Q2, 2009

7. VOC Study on EVs – Customers Interest in Electric Vehicles and Acceptability to New Business Models

8. The Generation Y Consumer : Future Vehicle and Features Choice and Brand Marketing Positioning Study –

Consumer Study to have section on EVs – Q2, 2009

9. VOC Study on Sustainability and Alternate-Fuel Vehicles and Technologies in USA

10. Strategic Profile and Business Model Assessment of (Project) Better Place – Q3, 09

Note : new titles and schedule is subject to change and is not guaranteed. Titles for second half of 2009 are still to be confirmed. Suggestions are welcome

Pu

blish

ed

Researc

hIn

Pro

cess R

esearc

h

14

Next Steps

Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities(www.frost.com/news)

Register for the next Chairman’s Series on Growth:

The CEO's Growth Team™: Research & Development Driving Growth and

Innovation (April 7th) (http://www.frost.com/growth)

Join us at our 5th Annual Customer Contact Executive MindXchange April 19-22 2009, Bonita Springs, FL (www.frost.com/ccs)

Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. (myfrost@frost.com)1-877-GoFrost (1-877-463-7678)

Follow Frost & Sullivan on-line at:

� http://twitter.com/Frost_Sullivan

� http://www.facebook.com/people/Frost-Sullivan/1131686497

15

Your Feedback is Important to Us

Growth Forecasts?

Competitive Structure?

Emerging Trends?

Strategic Recommendations?

Other?Please inform us by taking our survey.

What would you like to see from Frost & Sullivan?

16

For Additional Information

To leave a comment, ask the analyst a question, download a copy,

or receive the free audio segment that accompanies this

presentation, please contact Stephanie Ochoa, Analyst Briefing

Coordinator, at (210) 247-2421 or via email,

analystbriefings@frost.com.